Illinois lawmakers have introduced House Bill 5811 to remove the states tax and licensing requirements on prediction market wagers tied to sports events. The bill targets recent amendments that classified these contracts as “exchange wagers” and imposed a tiered transaction tax alongside costly licensing fees.
Under the current law, prediction markets offering sports-event contracts must pay a 1.75% tax on the first five million exchange wagers annually, increasing to 3.5% for wagers beyond that threshold. Additionally, platforms face a $15 million initial licensing fee valid for four years, with $1 million due for each renewal. These provisions were introduced as part of Illinois fiscal-year 2027 budget, signed earlier this year by Governor JB Pritzker.
House Bill 5811, introduced by Republican state Representative Travis Weaver, seeks to repeal the definition of “exchange wager” from the Sports Wagering Act and eliminate the associated transaction tax. Weaver told CDC Gaming, “I just had a huge problem with that, since we actually didnt budget any revenue from the new taxes. What we did was budget additional cash for the attorney general to defend them.”
This legislative move could reduce costs and regulatory barriers for Illinois players interested in prediction markets. Currently, the high licensing fees and taxes may limit the availability and competitiveness of these platforms, potentially restricting consumer options in this emerging betting category.
The bill does not affect Illinois existing sports betting tax structure, which includes graduated tax rates from 20% to 40% on adjusted sports wagering receipts and per-wager fees for mobile sportsbook operators. Instead, it specifically targets the newer category of exchange wagers linked to prediction markets.
Legal challenges to Illinois regulations are underway. The Commodity Futures Trading Commission (CFTC) and prediction market operator Kalshi have filed lawsuits arguing that the states licensing and tax provisions are preempted by federal commodities law. Illinois officials defend these measures as necessary consumer protections against illegal gambling.
Players should monitor these developments, as the outcome could affect the availability, cost, and regulatory oversight of prediction market platforms in Illinois. The bill is expected to be considered during the 2027 legislative session, with potential for earlier discussion in the upcoming veto session.
Prediction markets have attracted attention for their growing popularity and unique risks. For instance, a recent case involved former congressman George Santos, who was banned from Kalshi after allegedly betting on himself not attending the State of the Union address, an incident described as insider trading. More on the broader context of prediction markets can be found in The Guardians recent commentary.
For Illinois players interested in sports betting and prediction markets, staying informed about regulatory changes is important. The evolving legal landscape may impact how and where wagers can be placed, as well as the protections available. Related coverage on prediction markets and legal challenges is available from CDC Gaming, including Underdogs lawsuits against states and election-season trading impacts.
Read the full CDC Gaming report on this development here.
For more on Illinois and sports betting regulation, visit our USA and Sports Betting sections.
- Illinois Bill Proposes Removing Tax on Prediction Market - September 10, 2026
- Prediction Markets Draw Player Scrutiny After High-Profile - September 8, 2026
- Nevada Court Upholds Ban on Kalshi Sports Prediction Markets - September 7, 2026